tv [untitled] December 13, 2010 2:00pm-2:30pm PST
and in addition to the sequel -- ceqa process that will come before this body, we believe we will have ample opportunities to weigh in. the last question put forward by supervisor campos was around the city offering development in exchange for infrastructure improvements necessary to host the event. we did some research with the chicago olympic bid, the london olympic bid, and the host offer. those jurisdictions of for the enormous amounts of cash subsidy from the local government, the regional government, and the state government. they put a large degree of risk on the venues to cover cost overruns. chicago had been publicly guaranteed $500 million in costs
for their olympic bid, and private revenue was expected to $246 million. the london olympic bid required 875 -- 875 million pounds worth of risk and costs. the valencia local and regional government had a 16 million euro agreement. obligating the general fund directly might be a feasible way to pay for the costs we are going to incur to host this event. we landed on development agreement where we get improved assets and the team gets to
recoup the cost that they would be investing in our waterfront in order to host the event. that is just to answer how we landed on that formula. those were my specific updates. i wanted to invite brad benson from the port to come up that directly affect the port. supervisor mirkarimi: mr. bentsen. >> and the special projects manager representing 14. i wanted to address supervisor avalos's questions from the hearing. and to talk a little bit about the jobw impactwwwwwwww ofwwwwww that displacement -- and to talk
a little bit about the job impact of that displacement. that have the overhead display? that is too small to read. what i will do is hand copy members of the committee and talk to the slide instead. essentially, we're talking about is the 19-29 sheds, and pier 28. these are all industrial warehouse sheds. most of the tenants in 19, 23,
29, 28, at 26 our warehouse -- are warehouse tenants. the activity that is going on in those areas is storage activity. there are a few smaller maritime tenants who are in the processing business. we would try to relocate them to our fish processing facilities. there are a few office tenatnnts in piers 26 and 28, includeing ideo, a lease just before the board of supervisors.
it would endeavor to relocate all of the tenants that would be displaced either too poor property or to provide -- we think there is the likelihood of a high degree of success of keeping those businesses in the city. we know there is substantial vacancy rates. supervisor avalos: what kind of space is available? you mentioned you looked at the port. >> with respect to warehouse space, we have a vacancy at pier 50. at the other locations, we have
office buildings in the northern waterfront and in the southern waterfront as well. a lot of your question was going to draw attention. the concern would be that we would be unable to keep them as tenants and we would lose them to another port. we would be exporting jobs to another jurisdiction in the bay area. with this particular set of locations, we don't have that here. if these were successful in san francisco, we have reason to believe alternate airport locations or private-sector locations would want to stay in san francisco.
we also discussed a little bit, providing some of this to tenants so that everyone knew what was happening. 26 was a late entrance to the discussion. and the poor real estate division supplied a notice to all of the tenants and all of the vineyard sites explaining the board goes a consideration including which sites would be affected tomorrow. >> what kind of timeline are you talking about? >> it depends. it envisions a different kinds of occupancies for different sites. some of the sites might be made available as early as the beginning of 2012. that will be necessary if there will be construction activity at those sites.
we envision 2012 being the construction time. we talked about shorter-term occupancy, as little as six months. that may provide some flexibility to both the team in the port -- under that type of occupancy, they might avoid costly upgrades to facilities where they are not needed. and of course, it would realize a lesser rent loss. i will turn this into you and make sure that the clerk as a copy as well. i wanted to go to the issue that i think was raised by the budget analysts last wednesday, a question about how the team is proposed to be reimbursed for
its infrastructure works. the basic proposal here is that the authority would provide private financing to meet waterfront improvements and that the city would offer long-term development rights as a way to repave that investment. we have contemplated commercially reasonable financial terms, these longer- term development rights with a rent credit as a way of making sure that they get their money back that they have invested in the waterfront. that is a mechanism we have used in other long-term development agreements to read a private investment. the question that came up, there is also potential tax improvement financing under this proposal.
the port was successful with of getting an infrastructure financing law that would allow growth and property taxes to be reinvested in public improvement along the waterfront. i think the staff raised the issue of whether or not there could be to forms of repayment as a rent credit and financing. we have been in consultation with and the city attorney's office, and i want to thank them for crafting a new clarifying amendments. it makes clear that the grant credit calculation as to back out any tax increment financing that would be subject to approval by the board of supervisors. i want to pause there and ask their -- and ask if there are
any questions. it makes clear that the city will only pay once for these improvements. there was a lot of press coverage over the course of the weekend, the letter from the team. and members of the board of supervisors as well. there was a counter proposal sent to the city's team over the weekend. without getting too much into those in terms of my presentation, i want to say that i am available to answer any questions you might have about the concerns in a letter. if you want to discuss some of the things they raised in the counterproposal, we would be happy to do that as well. supervisor mirkarimi: other than the quality of the letter, was there anything of surprise? >> the concern underlying the
letter and the counterproposal is the desire for some certainty. it is a highly uncertain process. we have future approvals are required down the road. the team is trying as much as we can to try to gain more certainty in the agreement. we understand that representatives of the team are coming to town this afternoon to be able to sit down with them and discuss the ways in which the city can provide that certainty. we want to make sure that it is a good investment from their perspective. we talked last wednesday about commercially reasonable financial terms. we want to make sure that the port is getting a fair market rent consistent with the budget analyst recommendations, and want to make sure that private investors are realized on the
terms. we look forward to those discussions and we will keep you apprised. supervisor mirkarimi: absent a king of sand francisco or prime minister, we are doing the best to provide whatever certainty we can. they will be glad to know that we are putting this forward as we effectively are allowed to. and we are making progress. supervisor avalos: and have been transparent through of the process. supervisor mirkarimi: i want to again thank iewd and port for the rest of the -- oewd and port. what are the highlights of this deal that is before us, and how
might it contrasted the earlier deal? >> i will do my best to do this on the fly. the host city agreement provides that over the course of the next year, the city will take the lead on performing compliance with the california environmental quality act for purposes of studying the event and any environmental impact that might arise. there will be a lot of consultation of state and federal permitting agencies. at the end of that year, that document is appealable for the board of supervisors. the options will include hosting the event in san and cisco, hosting the event at some alternative location, those have
been described as a no project alternative that would allow the city to not proceed. the second section provides a number of plans will be developed. subject to review by the authority. at the end of that period, both the authority and sfacoc would have right to terminate the agreement without harm. i will defer to jennifer to discuss sections 3 and 4 of the agreement related to securing the course area, getting approvals to run the rates on san francisco bay and secure aerospace. and we would enter of a new
leases for all of the locations that we have talked about. providing for their use of the facilities from essentially 2012 to the end of 2013 and the beginning of 2014 for the purposes shown on the slide. if there is a success in the undertaking, there be the opportunity to discuss a new post city agreement. we can keep all of the economic benefits, whether it provides another round. subsequent to the match, the city and the event authority would renegotiate and enter into long-term development
agreements after performing another round. pier 26 and 28 would be subject to its own ceqa analysis. those agreements would be subject to final approval. supervisor mirkarimi: this would not be the final whistle stop? >> there are a couple of major sets of approvals at the end of 2012 and at some point after that. supervisor mirkarimi: chair avalos, should we go to the budget analyst? we appreciate the good work your
office has done the past few days to prepare for today. >> thank you much, supervisor mirkarimi. as we previously reported, we estimate that the event would generate $1.2 billion in expenditures that would benefit businesses located in san francisco and would support her 8160 labour years. on page 3 of the report, the event authority would be required to make infrastructure improvements to peter's 32, 27, a 29 as deemed appropriate by the of that authority. for making such improvements, the cost is $55 million. the port would transfer a long- term development right for the event authority and long-term
development rights for lot 330. it will require improvements to be made by the of that authority. that is on page 9. the of that authority would also have the option of making infrastructure improvements to peter's 26 and 28, and for the area adjacent to 36 in the water area between 14 and 22 or between 30, 32, and thirty eighth. the improvements to 26 and 28 have estimated $25 million cut would only be incurred if the of that authority determines they are needed for the event and elects to make such improvements. if the event authority exercises its options, the of that
authority would invest a total of $80 million. in return, the port would transfer the long term development rights to the event authority. on page 4 of the report, based on the latest comparative analysis, under the proposed waterfront alternative the agreement, this is shown on page 5 of the report. the city would realize an estimated net gain of $12.3 million. you were asking about the comparative number. that gain compares to the previously estimated net loss of
14.6 million. the reason for that difference that compared to the estimated net loss, under the originally proposed legislation agreement, as shown in table b, this is due to the removal of peir 50. and is due to a smaller infrastructure improvement costs requirement of the event already. -- event authority. that means that the city would capture more incremental property taxes rather than having to use the larger amount of incremental property taxes to reimburse the event authority for subsequent infrastructure
improvement costs. that is the basic difference between our original report, the prior agreement, and this report. under the prior agreement the the event authority was going to pay no rent under the proposed northern waterfront alternative agreement, the port would receive a commercially reasonable payment from the authority. it would be partially offset to provide reimbursement to the event authority for the infrastructure improvement costs. on page 5 of the report, we state that the estimated net gain to the city is shown on page 5 and does not include the
the value of old port properties through which long-term development rights could develop and be granted by the event authority. if it determines that it needs peer's 26 at 28 for america's cup, the options to pay for improvements have allowed the proposed agreement and the comparative value for properties with and without the event authority. our numbers are based -- the have not yet prepared to the rent that would be realized under those options. supervisor mirkarimi: you are referring to 26 and 28. >> absolutely.
you see that there is a tow $0.3 million gain, and it compares to what we stated before. we have a number of policy recommendations. we modified leaves a little bit from last week's reports. our first recommendation is to amend the proposed agreement to require that the organizing committee pay the city and county $32 million, or final estimated city costs were determined to be completed by december 31, 2012. the president has submitted an
amendment to the budget and finance committee. we heard the court to testify that they are going to use their best efforts for that 32 million or whatever is needed. we do not use the language of best efforts. i'm not sure what that means. ours is more specific. and we require that any term sheets and this position -- you are mentioning that there are still documents have to bestow other processes that have to be approved by the board of supervisors. one thing that is not required is that as we understand it, related to the event authority, including long-term development rights under the america's cup, it was approved by the board of supervisors. with also recommend that the
city and county of san francisco could require that the golden gate yacht club, would be empowered to select the venue. we also recommend that you amend the proposed agreement to require that the event authority -- here is the difference. we say specifically, fair market value rent. i don't know what commercially feasible rent means. we feel the better language would be fair market value rent. the agreement states that the event authority would pay for reasonable -- >> the rental rates are comparable space.
our other recommendation is that you consider creating a temporary assessment district in order to receive additional revenues from those businesses that will benefit from san francisco hosting america's cup. we recommend that you structure a joint powers agreement or similar mechanism to unable joint funding from surrounding jurisdictions. it will receive a significant economic benefit. such jurisdictions would not incur any costs to be paid under the proposed city and a new agreement. i might add that similar regional financing was used in hosting the thirty second of
america's cup. finally, we stated that based on our view of the agreement, we conclude that hosting america's cut is -- cup is fiscally feasible. we consider, of course, the approval of the proposed resolution. supervisor mirkarimi: unless we have questions from colleagues, we will probably return to you. will ando askedewd -- we will ask oewd to respond to your recommendation. if that's all right, colleagues.
>> good afternoon, supervisors. this morning, my office released our fiscal economic assessment of the northern waterfront agreement that was introduced last week. the major change with respect to the northern waterfront agreement with the addition of long term development rights for 26 at 28. -- a and 28 -- piers 26 and 28.